Investing Strategies and Financial Tips

Hedge Fund 13F Season is Coming!

Despite the boring sounding title, this time of the quarter is actually really fun! If you are at all interested in following hedge funds (for the reason of finding out new investment ideas), then these filings are great places to start. As the Investopedia definition says, 13F”s are required by any fund that has over $100m in assets. Basically, this includes all the major funds. Funds are required to list their positions as of the end of the quarter within 45 days after the quarter ends. However, much like a balance sheet, a Form 13F only shows the holdings at a specific moment in time (i.e., a single day).

That said, there are definitely some caveats to watch for when consulting a fund’s holdings at the end of a quarter. For funds with high turnover, such as a high-frequency trading firm or short term swing trading fund, the 13F’s are probably not valuable, since the fund’s positions have most likely changed significantly since the filing. Some funds included in this bucket are Renaissance Technologies and D.E. Shaw. However, 13F’s are great for value investing funds, because most value investors hold positions for a very long period of time. Some of these funds that I follow personally (and their managers) are:

Berkshire Hathaway (Warren Buffett)

Baupost Group (Seth Klarman)

Soros Fund Management (George Soros)

Greenlight Capital (David Einhorn)

Pershing Square (Bill Ackman)

Appaloosa Management (David Tepper)

Icahn Capital (Carl Icahn)

Paulson & Co (John Paulson)

These are some of the most well known value funds or activist funds. The links above are to the SEC’s EDGAR search results page for them. If you click on “Documents” next to the 13F-HR filing, then click on the .txt file, you can view the fund’s holdings for this quarter.

Although the document isn’t pretty, it gets the point across. Name of Issuer is obviously the the company itself. Title of class is what type of position the fund holds (“Com” stands for common shares). Market Value and Principal Amount can be used to find out how many shares the fund owns, although most 13F’s disclose that as well. CUSIP Number is not really important. There are some other columns as well, but these are the main ones we’re interested in.

So, there you have it! Instant stock ideas! Obviously, it goes without saying that you must still further research any investment opportunities before you buy it. Refer to my list of the Top Ten Rules of Value Investing for more on that.

===

Was this post helpful? Have any further questions regarding hedge funds or investing in general? Let me know in the comments, and be sure to subscribe to the Investing Part Time RSS feed to ensure you get all the upcoming posts!